Education is key to ending U.S. income gap: Bernanke

WASHINGTON (MarketWatch) -- Education, not protectionism, is the best weapon in the fight against rising income-inequality, said Fed chief Ben Bernanke.

In his first in-depth speech on the topic that is on the minds of many members of Congress, Bernanke said that the government must make a greater effort to assist workers who suffer from economic change.

"If we do not place some limits on the downside risks to individuals affected by economic change, the public at large might become less willing to accept the dynamism that is so essential to economic progress," Bernanke said in a speech to the Chamber of Commerce in Omaha Nebraska. Read full text of his speech.

Bernanke did not address the current economic environment or monetary policy issues. He will deliver a closely-watched report on these topics to Congress on Feb. 14-15.

Bernanke said he thought lifelong education initiatives, from early childhood programs thorough on-the-job training would pay high rates of return to individuals.

The Fed chief argued that this gap between the poorest workers and the highest-paid CEOs is not an overnight event.

"Rising inequality...has been evident for at least three decades," Bernanke said.

The gap rose particularly rapidly through most of the 1980s, although it has continued to trend higher.

Bernanke said globalization was not the villain that some observers suggest.

Instead, it has been technical advances in the workplace that has raised the wages of skilled workers, he said.

"Overall, I read the available evidence as favoring the view that the influence of globalization on inequality has been moderate and almost surely less important than the effects of skill-based technological change," he said.

As a result, erecting trade barriers to trade and investment would not be helpful, he said.

Bernanke made no conclusion on the issue of soaring CEO compensation, beyond noting that some economists tie it to the increased complexity of corporations, while others see it as a result of CEOs being in charge of their own pay.

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